This stock took a beating on earnings disappointment, but analysts forecast a 17.5% growth rate for this year. It’s trading at a bargain price right now.
Merit Medical Systems, Inc. (MMSI)
From Game Changers
Merit Medical Systems, Inc. (MMSI) reported a very disappointing quarter last night, as new product launches have started slowly, and currency headwinds hurt the company.
Revenues were up 13.7% to $255.5 million. While this was only 1.8% below expectations, the company had higher-than-expected sales of legacy products that the company began selling through Group Purchasing Organizations (GPOs), which carry lower margins. Meanwhile, new products and products acquired from Becton Dickinson (BDX) were disappointing.
Earnings per share (EPS) of $0.42 vs. $0.43 was $0.08 below expectations of $0.50. The company lowered EPS guidance for the year to $1.74-$1.97 a share from $1.97-$2.08 a share. The company cited the ramping of the GPO contracts as key to getting into the high end of expectations. Management on the conference call also noted that sales of ClariVein, its vein restoration products, which was acquired from Becton Dickinson, began to improve in July. Management reiterated their call forecast for 14% to 19% EPS growth for next year, albeit from the lower base.
Conservatively, I believe MMSI can get to $2.00 EPS in 2020, and the stock should make it back above $50. My new buy under price is $40. My target is $52.
Hilary Kramer, Game Changers, Eagle Financial Publications, https://www.hilarykramer.com/, 844-419-4548, July 26, 2019